Short-term money is useful for buying and fixing a Lexington rental, but it is expensive to keep. Once the property is finished and leased, a rate-and-term DSCR refinance replaces the hard money, bridge loan or seller note with a long-term loan sized on what the property now rents for.
In short: LendingStreet refinances 1-8 unit rentals in Lexington and central Kentucky with DSCR rate-and-term loans that pay off hard money, bridge or existing mortgages, up to 80% LTV on some programs. The loan qualifies on rent with no W-2s or tax returns, 30-year terms are available, and the standard minimum DSCR is 1.0x.
A rate-and-term refinance pays off existing debt plus closing costs without taking meaningful cash out. It is the natural next step after a rehab financed with hard money, after a bridge loan used to buy and lease a property, or when an adjustable or balloon loan is coming due. Because no cash leaves the deal, seasoning rules are often easier than on a cash-out, and leverage can go up to 80% LTV on some programs.
For investors following a buy, renovate, rent and refinance plan, this step locks in the long-term payment that the property will carry for years. Getting it right matters more than getting it fast, so start early and bring a complete file.
This example is illustrative and not a quote. An investor bought and renovated a three-bedroom home in Nicholasville with a hard money loan that now has a balance of $248,000. Estimated interest-only payments are about $2,170 a month, and the loan matures in three months. The finished home appraises at $335,000 and leases for $2,150 a month.
A new DSCR loan of $254,500 pays off the hard money loan and about $6,500 of closing costs, for an LTV of about 76%. Estimated principal and interest on a 30-year term is about $1,736. With taxes of $300, insurance of $135 and HOA dues of $30, the payment is $2,201 and the DSCR is about 0.98x.
The difference in monthly cost is significant. Moving from an interest-only short-term payment to a fixed 30-year payment lowers the monthly outlay in this example and removes the maturity deadline entirely, which is the main reason to refinance.
| Item | Hard money today | DSCR refinance |
|---|---|---|
| Balance | $248,000 | $254,500 |
| Payment type | Interest-only, short term | 30-year amortizing |
| Principal and interest (or interest only) | $2,170 | $1,736 |
| Maturity | About three months | 30 years |
| Ratio at $2,150 rent | - | 0.98x |
Many Lexington investors own outside Fayette County, where prices are lower and newer subdivisions are common. Nicholasville and Wilmore in Jessamine County, Georgetown in Scott County, Winchester in Clark County and Versailles in Woodford County each have their own PVA, tax levies and, in some subdivisions, HOA rules on leasing. Check those before you refinance, because HOA dues and taxes are part of the payment.
In newer Jessamine and Scott County subdivisions, taxes may still reflect a partially built lot or a prior assessment. Budget on the finished value so the payment in your DSCR math matches what you will actually pay once the bill catches up.
Start the refinance 45 to 60 days before your short-term loan matures. Appraisals can take time to schedule, and you want the property leased and the tenant moved in before the appraiser visits. Gather the payoff letter, the lease, proof of rent received, your insurance declaration and your LLC documents up front. If the maturity date is very close, ask your current lender about a short extension as a backup.
Appraisers compare the property with recent sales of similar renovated homes. In newer subdivisions, the comparables are usually other homes in the same development; in older Lexington neighborhoods, they are renovated homes on nearby streets. Provide your scope of work, permits and before-and-after photos. The appraiser will also estimate market rent, which goes straight into the DSCR.
If the appraisal comes in lower than expected, you may need to bring cash to closing to stay within the program's maximum LTV. A short extension on the existing loan can give you time to lease a vacant unit or gather stronger comparables.
Investors usually come to us with one of these.
If the appraisal comes in high enough, you might be able to take cash out, up to 75% LTV. If you only need to retire the short-term debt, rate-and-term keeps the loan smaller and the DSCR stronger. In Lexington, where many renovated homes appraise well above the purchase plus rehab cost, it is worth pricing both so you can compare the payment and the cash.
We can price both options from the same appraisal, so you only pay for one report while you decide.
If the DSCR lands under 1.0x, you can bring cash to closing to lower the loan, extend your lease at a higher rent if the market supports it, or look at our sub-1.0 DSCR programs, which accept a lower ratio on some files with stronger credit and reserves. A 30-year amortization already keeps the payment as low as the structure allows.
Small changes help too. A one-year lease renewal at market rent signed before the appraisal can lift the qualifying rent enough to clear the minimum.
Our investor loans are business-purpose loans on non-owner-occupied property. Send the address, current loan statement, maturity date and lease through the form below or call (877) 298-1001. For statewide notes, see our Kentucky rate-and-term refinance page.
Yes. Paying off hard money or a bridge loan after a rehab is one of the most common uses of a DSCR rate-and-term refinance.
Up to 80% LTV on some programs, enough to pay off the existing loan and closing costs, as long as the DSCR meets the program minimum.
A signed lease is the strongest support. Some programs can use market rent on a vacant property, but leased is better.
Plan on several weeks, mostly for the appraisal. Start well before your current loan matures.
Yes. We lend on 1-8 unit rentals throughout the Lexington area and central Kentucky.
Usually yes on a rate-and-term refinance, within the program LTV and DSCR limits.
Requirements are often lighter than for cash-out, but they vary by program.
The property must be legally rentable under HOA rules. Check covenants for leasing limits before you refinance.
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